Sentencing today for Chicago man in Mumbai terror attack

David Coleman Headley, an admitted terrorist with links to al-Qaida who helped plot the 2008 massacre in Mumbai, is scheduled to be sentenced today at Chicago’s federal courthouse.

Headley, 52,  who is to be sentenced amid heightened security measures in U.S. District Judge Harry Leinenweber’s courtroom, faces up to life in prison. He pleaded guilty to scouting out sites to be targeted in the terrorist attack that killed more than 160 people – including six Americans -- in India’s largest city. He also admitted playing a similar role in an aborted plot to storm a Danish newspaper and behead staffers in retaliation for printing a cartoon of the Prophet Muhammad.

Federal prosecutors have cited Headley’s extraordinary cooperation for seeking a sentence of 30 to 35 years in prison.

Headley, who agreed to cooperate on the day of his arrest at O’Hare International Airport as he prepared to fly overseas, detailed the inner-workings of Lashkar-e-Taiba, the Pakistani terror organization that planned the Mumbai attacks. His information led to charges against seven terrorist figures, including his childhood friend from a Pakistani school, Tahawwur Rana, a former Chicago businessman.

Headley was the key witness at the trial of Rana, who was convicted of aiding the Denmark plot and providing support to Lashkar.  Judge Leinenweber sentenced him  last week to 14 years in prison, about half what prosecutors sought.

Headley, an American citizen of Pakistani descent,  came to the United States at age 17 and was twice convicted of drug smuggling in the late 1980s. He later agreed to work as an informant for the DEA. Headley also revealed during testimony  at Rana’s trial that there was an overlap between his work for the DEA and his early days with Lashkar.

Headley became involved with Lashkar, a radical group that opposes Indian rule in divided Kashmir, around 2000, attending training camps between 2002 and 2005. He had moved to Chicago by 2009 and reconnected with Rana.

Though embraced by Rana’s family, Headley lived a very different life that included multiple wives and apparently indoctrinating even his children with his ideologies. His 5-year-old son once dropped to the ground in a Chicago park and pretended to fire a weapon after a soccer coach yelled "shoot, shoot!" to him during a game, Headley testified at Rana’s trial.

asweeney@tribune.com

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North Korea to target U.S. with nuclear, rocket tests

SEOUL (Reuters) - North Korea said on Thursday it would carry out further rocket launches and a nuclear test that would target the United States, dramatically stepping up its threats against a country it called its "sworn enemy".

The announcement by the country's top military body came a day after the U.N. Security Council agreed to a U.S.-backed resolution to censure and sanction North Korea for a rocket launch in December that breached U.N. rules.

North Korea is not believed to have the technology to deliver a nuclear warhead capable of hitting the continental United States, although its December launch showed it had the capacity to deliver a rocket that could travel 10,000 km (6,200 miles), potentially putting San Francisco in range, according to an intelligence assessment by South Korea.

"We are not disguising the fact that the various satellites and long-range rockets that we will fire and the high-level nuclear test we will carry out are targeted at the United States," North Korea's National Defence Commission said, according to state news agency KCNA.

North Korea is believed by South Korea and other observers to be "technically ready" for a third nuclear test, and the decision to go ahead rests with leader Kim Jong-un, who pressed ahead with the December rocket launch in defiance of the U.N. sanctions.

China, the one major diplomatic ally of the isolated and impoverished North, agreed to the U.S.-backed resolution and it also supported resolutions in 2006 and 2009 after Pyongyang's two earlier nuclear tests.

Thursday's statement by North Korea represents a huge challenge to Beijing as it undergoes a leadership transition, with Xi Jinping due to take office in March.

China's Foreign Ministry called for calm and restraint and a return to six-party talks, but effectively singled out North Korea, urging the "relevant party" not to take any steps that would raise tensions.

"We hope the relevant party can remain calm and act and speak in a cautious and prudent way and not take any steps which may further worsen the situation," ministry spokesman Hong Lei told reporters at a regular press briefing.

North Korea has rejected proposals to restart the talks aimed at reining in its nuclear capacity. The United States, China, Russia, Japan and the two Koreas are the six parties involved.

"After all these years and numerous rounds of six-party talks we can see that China's influence over North Korea is actually very limited. All China can do is try to persuade them not to carry out their threats," said Cai Jian, an expert on Korea at Fudan University in Shanghai.

Analysts said the North could test as early as February as South Korea prepares to install a new, untested president or that it could choose to stage a nuclear explosion to coincide with former ruler Kim Jong-il's Feb 16 birthday.

"North Korea will have felt betrayed by China for agreeing to the latest U.N. resolution and they might be targeting (China) as well (with this statement)," said Lee Seung-yeol, senior research fellow at Ewha Institute of Unification Studies in Seoul.

U.S. URGES NO TEST

Washington urged North Korea not to proceed with a third test just as the North's statement was published on Thursday.

"Whether North Korea tests or not is up to North Korea," Glyn Davies, the top U.S. envoy for North Korean diplomacy, said in the South Korean capital of Seoul.

"We hope they don't do it. We call on them not to do it," Davies said after a meeting with South Korean officials. "This is not a moment to increase tensions on the Korean peninsula."

The North was banned from developing missile and nuclear technology under sanctions dating from its 2006 and 2009 nuclear tests.

A South Korean military official said the concern now is that Pyongyang could undertake a third nuclear test using highly enriched uranium for the first time, opening a second path to a bomb.

North Korea's 2006 nuclear test using plutonium produced a puny yield equivalent to one kiloton of TNT - compared with 13-18 kilotons for the Hiroshima bomb - and U.S. intelligence estimates put the 2009 test's yield at roughly two kilotons

North Korea is estimated to have enough fissile material for about a dozen plutonium warheads, although estimates vary, and intelligence reports suggest that it has been enriching uranium to supplement that stock and give it a second path to the bomb.

According to estimates from the Institute for Science and International Security from late 2012, North Korea could have enough weapons grade uranium for 21-32 nuclear weapons by 2016 if it used one centrifuge at its Yongbyon nuclear plant to enrich uranium to weapons grade.

North Korea has not yet mastered the technology needed to make a nuclear warhead small enough for an intercontinental missile, most observers say, and needs to develop the capacity to shield any warhead from re-entry into the earth's atmosphere.

North Korea gave no time-frame for the coming test and often employs harsh rhetoric in response to U.N. and U.S. actions that it sees as hostile.

The bellicose statement on Thursday appeared to dent any remaining hopes that Kim Jong-un, believed to be 30 years old, would pursue a different path from his father, Kim Jong-il, who oversaw the country's military and nuclear programs.

The older Kim died in December 2011.

"The UNSC (Security Council) resolution masterminded by the U.S. has brought its hostile policy towards the Democratic Peoples Republic of Korea (North Korea) to its most dangerous stage," the commission was quoted as saying.

(Additional reporting by Christine Kim in SEOUL, Ben Blanchard and Sui-Lee Wee in Beijing; Writing by David Chance; Editing by Raju Gopalakrishnan and Ron Popeski)

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Stock futures flat, but techs rally in premarket

NEW YORK (Reuters) - Stock index futures were flat on Wednesday, with investors reluctant to make big bets following a five-day rally that took major averages to levels not seen since December 2007.

Tech shares will be in focus with earnings due from tech heavyweight Apple and following strong results from both IBM and Google, which rallied in premarket trading and continued the string of major companies outperforming following results.

Investors were also cautious as they awaited another onslaught of earnings reports, including from Dow component McDonald's Corp . Apple Inc reports after the market's close and investors will scour that report for signs the company can continue to grow at an accelerated pace.

"The market has an upward bias because earnings have generally been better than most expected, but whether we take another leg up from here depends on Apple," said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York. "That is such a heavily watched stock that if it doesn't come out with strong numbers we could take a pause."

Google Inc rose 5.1 percent to $738.61 in light premarket trading a day after the search giant's core Internet business outpaced expectations. Revenue was also higher than expected.

International Business Machines Corp late Tuesday forecast better-than-anticipated 2013 results and also posted fourth-quarter earnings and revenue that beat expectations. The results helped to allay concerns about the tech sector that arose when Intel Corp gave a weak outlook last week. IBM, which is a Dow component, rose 3.9 percent to $203.81 before the bell.

Dow component United Technologies Corp reported earnings that fell from the prior year, hurt by large restructuring charges.

Coach Inc slumped 12 percent to $53.20 before the bell after reporting sales that missed expectations.

According to the latest Thomson Reuters data, of the 74 S&P 500 companies that have reported earnings so far, 62.2 percent have topped expectations, roughly even with the 62 percent average since 1994, but below the 65 percent average over the past four quarters.

Overall, S&P 500 fourth-quarter earnings rose 2.6 percent, according to Thomson Reuters data. That estimate is above the 1.9 percent forecast from the start of earnings season, but well below the 9.9 percent fourth-quarter earnings forecast from October 1, the data showed.

S&P 500 futures fell 1.8 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 3 points and Nasdaq 100 futures rose 4 points.

Both the S&P 500 and Dow Jones industrial average hit five-year closing highs on Tuesday, and recent gains have largely been fueled by a strong start to the earning season. The S&P has jumped 6.4 percent over the past four weeks.

Republican leaders in the U.S. House of Representatives aim on Wednesday to pass a bill to extend the U.S. debt limit by nearly four months, to May 19. The White House welcomed the move, saying it would remove uncertainty about the issue.

The debt limit issue has been viewed as a market overhang for the past few weeks, with many investors worried that if no deal is reached to raise the limit, it could have a negative impact on the economy.

"We're raising our year-end target from 1,535 to about 1,575, in part because of the strong fourth-quarter earnings, but also because with the debt ceiling off the table that's a headwind removed from the market," Pursche said.

(This version of the story corrects spelling the of Oliver Pursche.)

(Editing by W Simon and Kenneth Barry)

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Te'o tells Couric he briefly lied about girlfriend

NEW YORK (AP) — Notre Dame linebacker Manti Te'o has told Katie Couric that he briefly lied about his online girlfriend after discovering she didn't exist, while maintaining that he had no part in creating the hoax.

Pressed by Couric to admit that he was in on the deception, Te'o said he believed that his girlfriend Lennay Kekua had died of cancer and didn't lie about it until December.

"Katie, put yourself in my situation. I, my whole world told me that she died on Sept. 12. Everybody knew that. This girl, who I committed myself to, died on Sept. 12," Te'o said in an interview to air Thursday on Couric's syndicated talk show. A segment of the interview with Te'o and his parents was broadcast Wednesday on "Good Morning America."

The Heisman Trophy runner-up said he only learned of the hoax when he received a phone call in December from a woman saying she was Kekua.

"Now I get a phone call on Dec. 6, saying that she's alive and then I'm going be put on national TV two days later. And to ask me about the same question. You know, what would you do?" Te'o said.

An Associated Press review of news coverage found that the Heisman Trophy runner-up talked about his doomed love in a Web interview on Dec. 8 and again in a newspaper interview published Dec. 10.

Te'o's father defended his son when Couric pointed out that many people don't believe the Irish star, suspecting he used the situation for personal gain.

"People can speculate about what they think he is. I've known him 21 years of his life. And he's not a liar. He's a kid," Brian Te'o said with tears in his eyes.

On Tuesday, the woman whose photo was used as the "face" of the Twitter account of Te'o's supposed girlfriend says the man allegedly behind the hoax confessed and apologized to her.

Diane O'Meara told NBC's "Today" show that Ronaiah Tuiasosopo used pictures of her without her knowledge in creating a fake woman called Lennay Kekua.

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Blast from the Past: NASA Fires Historic Engine Parts for New Rocket

NASA is reigniting its mighty moon rocket engine using parts retrieved from museums and displays.

Engineers working this month at the Marshall Space Flight Center in Huntsville, Ala., are completing a series of test firings using recovered components from 40-year-old F-1 engines. The 19-foot-tall (5.8 meter) by 12-foot-wide (3.8 meter) Apollo powerhouses launched the space agency’s Saturn V rockets on voyages to Earth orbit and to the moon.

Between 1967 and 1973, a total of 65 F-1 engines were launched, five per flight, on 13 Saturn V boosters.

To develop the Space Launch System (SLS), NASA’s next generation heavy-lift rocket, engineers are dissecting, refurbishing and re-firing components from the remaining F-1s to gain a better understanding of how the engine was designed and worked. Even four decades later, the F-1 is still the most powerful single-chamber liquid-fueled rocket engine ever developed. [Graphic: Saturn V Moon Rocket Explained]

For these tests, which included a 20-second hot fire on Jan. 10, the team removed a gas generator from an F-1 engine that was stored at Marshall and another in almost pristine condition from the Smithsonian’s National Air and Space Museum in Washington, D.C.

From display stand to test stand

“Being able to hold the parts of this massive engine that once took us to the moon, restoring it, and then seeing it come back to life through hot firings and test data has been an amazing experience,” Kate Estes, a NASA liquid propulsion systems engineer, said in an agency release.

The team decided to take apart the gas generator, the part of the engine responsible for supplying power to drive the giant F-1′s turbopump, because its component parts were small enough to be tested in Marshall’s laboratories. The gas generator is often one of the first pieces designed on a new engine because it is a key part for determining the size of the final engine assembly.

Once they had the artifacts-turned-test-samples in hand, Marshall’s team used a novel technique called structured light 3D scanning to produce three-dimensional computer-aided design drawings of the gas generator.

“This activity provided us with information for determining how some parts of the engine might be more affordably manufactured using modern techniques,” Estes said. “We decided that using modern instrumentation to measure the generator’s performance would provide beneficial [data] for NASA and industry.”

The engineers then used a digital manufacturing technique called selective laser melting to quickly produce the metal parts they needed for the test and to determine the hot gas temperature and pressure inside the test article.

Old pad, new tricks

The series of hot-fire tests were conducted on Test Stand 116 in the Marshall Space Flight Center’s East Test Area.

“We modified the test stand to accommodate a single kerosene gas generator component,” test conductor Ryan Wall said. “These tests demonstrate the stand’s new capabilities, which will be beneficial for future NASA and industry propulsion activities.”

The most noticeable aspect of these firings is the sheer power when the gas generator ignites and creates roughly 31,000 pounds (14,000 kilograms) of force. When the original F-1 lit up, the gas generator powered the enormous turbomachinery that pumped almost three tons of propellant each second into the thrust chamber and accelerated through the nozzle, creating an incredible 1.5 million pounds (680,000 kg) of thrust.

“Modern instruments, testing and analysis improvements learned over [the past] 40 years, and digital scanning and imagery techniques are allowing us to obtain baseline data on performance and combustion stability,” said Nick Case, an engineer from Marshall’s propulsion systems department. “We are even gathering data not collected when the engine was tested originally in the 1960s.”

Since NASA conducted this work in-house, the data that was collected is not proprietary. It will be shared with the agency’s industry partners and academic researchers.

More F-1 tests on the horizon

“This effort provided NASA with an affordable way to explore an engine design in the early development phase of the SLS program,” said Chris Crumbly, manager of the SLS Advanced Development Office.

The larger, evolved SLS vehicle will require an advanced booster with more thrust than any existing U.S. liquid- or solid-fueled booster. Last year, NASA awarded contracts aimed at improving the affordability, performance, and the reliability of the rocket’s advanced booster.

Dynetics Inc. of Huntsville, Ala., in collaboration with Pratt & Whitney Rocketdyne of Canoga Park, Calif. — the same company that developed the F-1 engine — will use these early tests as a springboard for more gas generator testing at Marshall. Then, they will use modern manufacturing to build a new gas generator injector that also will be hot fired in Test Stand 116 and then compared to the baseline data collected during the earlier test series.

Additionally, Dynetics plans to fabricate and test several other F-1 engine parts, including turbine blades, leading to the testing of an entire F-1B powerpack including the gas generator and turbopump, the heart of engine operations.

Click through to collectSPACE.com to see video of the Apollo-era Saturn V F-1 gas generator blazing back to life.

Follow collectSPACE on Facebook and Twitter @collectSPACE and editor Robert Pearlman @robertpearlman. Copyright 2012 collectSPACE.com. All rights reserved.

Copyright 2013 SPACE.com, a TechMediaNetwork company. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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2013 could be 'climate game-changer'

An ice sculpture entitled 'Minimum Monument' by Brazilian artist Nele Azevedo outside Berlin's Concert Hall, September 2, 2009.

STORY HIGHLIGHTS

• The "neglected" risk of climate change seems to be rising to the top of leaders' agendas


• Extreme weather events are costing the global economy billions of dollars each year


• Gas can be an important bridge to a lower carbon future but it's not the answer


• More investment in renewable energy is needed, with fewer risks

Editor's note: Andrew Steer is President and CEO of the World Resources Institute, a think tank that works with governments, businesses and civil society to find sustainable solutions to environmental and development challenges.

(CNN) -- As leaders gather for the World Economic Forum in Davos, signs of economic hope are upon us. The global economy is on the mend. Worldwide, the middle class is expanding by an estimated 100 million per year. And the quality of life for millions in Asia and Africa is growing at an unprecedented pace.

Threats abound, of course. One neglected risk -- climate change -- appears to at last be rising to the top of agendas in business and political circles. When the World Economic Forum recently asked 1,000 leaders from industry, government, academia, and civil society to rank risks over the coming decade for the Global Risks 2013 report, climate change was in the top three. And in his second inaugural address, President Obama identified climate change as a major priority for his Administration.

Andrew Steer

For good reason: last year was the hottest year on record for the continental United States, and records for extreme weather events were broken around the world. We are seeing more droughts, wildfires, and rising seas. The current U.S. drought will wipe out approximately 1% of the U.S. GDP and is on course to be the costliest natural disaster in U.S. history. Damage from Hurricane Sandy will cost another 0.5% of GDP. And a recent study found that the cost of climate change is about $1.2 trillion per year globally, or 1.6% of global GDP.

Shifting to low-carbon energy sources is critical to mitigating climate change's impacts. Today's global energy mix is changing rapidly, but is it heading in the right direction?

Coal is the greatest driver of carbon dioxide emissions from energy, accounting for more than 40% of the total worldwide. Although coal demand is falling in the United States -- with 55 coal-powered plants closed in the past year -- it's growing globally. The World Resources Institute (WRI) recently identified 1,200 proposed new coal plants around the world. And last year, the United States hit a record-high level of coal exports—arguably transferring U.S. emissions abroad.

Meanwhile, shale gas is booming. Production in the United States has increased nearly tenfold since 2005, and China, India, Argentina, and many others have huge potential reserves. This development can be an economic blessing in many regions, and, because carbon emissions of shale gas are roughly half those of coal, it can help us get onto a lower carbon growth path.

However, while gas is an important bridge to a low carbon future—and can be a component of such a future—it can't get us fully to where we need to be. Greenhouse gas emissions in industrial countries need to fall by 80-90% by 2050 to prevent climate change's most disastrous impacts. And there is evidence that gas is crowding out renewables.

Renewable energy -- especially solar and wind power -- are clear winners when it comes to reducing emissions. Unfortunately, despite falling prices, the financial markets remain largely risk-averse. Many investors are less willing to finance renewable power. As a result of this mindset, along with policy uncertainty and the proliferation of low-cost gas, renewable energy investment dropped 11%, to $268 billion, last year.

What do we need to get on track?

Incentivizing renewable energy investment

Currently, more than 100 countries have renewable energy targets, more than 40 developing nations have introduced feed-in tariffs, and countries from Saudi Arabia to South Africa are making big bets on renewables as a growth market. Many countries are also exploring carbon-trading markets, including the EU, South Korea, and Australia. This year, China launched pilot trading projects in five cities and two provinces, with a goal of a national program by 2015.

Removing market barriers

Despite growing demand for renewable energy from many companies, this demand often remains unmet due to numerous regulatory, financial, and psychological barriers in the marketplace.

In an effort to address these, WRI just launched the Green Power Market Development Group in India, bringing together industry, government, and NGOs to build critical support for renewable energy markets. A dozen major companies from a variety of sectors—like Infosys, ACC, Cognizant, IBM, WIPRO, and others— have joined the initiative. This type of government-industry-utility partnership, built upon highly successful models elsewhere, can spur expanded clean energy development. It will be highlighted in Davos this week at meetings of the Green Growth Action Alliance (G2A2).

De-risking investments

For technical, policy, and financial reasons, risks are often higher for renewables than fossil-based energy. Addressing these risks is the big remaining task to bring about the needed energy transformation. Some new funding mechanisms are emerging that can help reduce risk and thus leverage large sums of financing. For example, the Green Climate Fund could, if well-designed, be an important venue to raise funds and drive additional investments from capital markets. Likewise, multi-lateral development banks' recent $175 billion commitment to sustainable transport could help leverage more funds from the private and public sectors.

Some forward-looking companies are seeking to create internal incentives for green investments. For example, companies like Unilever, Johnson & Johnson, and UPS have been taking actions to reduce internal hurdle rates and shift strategic thinking to the longer-term horizons that many green strategies need.

Davos is exactly the type of venue for finding solutions to such issues, which requires leadership and coalition-building from the private and public sectors. For example, the the G2A2, an alliance of CEOs committed to addressing climate and environmental risks, will launch the Green Investment Report with precisely the goal of "unlocking finance for green growth".

Depending on what happens at Davos—and other forums and meetings like it throughout the year—2013 could just be a game-changer.

Follow us on Twitter@CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Andrew Steer.

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200 firefighters battle massive Bridgeport warehouse blaze

Firefighters were still on the scene of a smoldering warehouse in Bridgeport this morning, pouring water on hot spots after a 5-11 alarm fire raced through the five-story building as a third of the department's on-duty personnel fought it.

The blaze was spotted by a fire chief passing by the former Harris Marcus Group building at 3757 S. Ashland Ave. shortly after 9 p.m. Extra alarms were quickly called as the fire spread throughout the warehouse and the roof collapsed and the more than 200 firefighters contended with frozen hydrants and icy ladders. The fire was finally brought under control around 12:30 a.m.

Chicago Fire Cmsr. Jose Santiago said the fire was Chicago's largest in seven years. "This was a very large fire, unbelievable fire load, a lot of wood, timber, old stuff, varnish," Santiago said on the scene. "Once it caught, it caught and ran.

"Everything is wood inside these buildings, beautiful façades on the outside. They've been up for a long time. When they start burning like this, they start coming down," Santiago said.

The commissioner said the freezing cold made the firefighters' job tougher. "We run into a lot of problems, like the ice weight on the building and ladders," Santiago said. "We had the Water Department to come out and steam off our ladders."

Heat from the fire could be felt several blocks away as flames climbed into the sky and ash rained down on cars.

"You could see the embers from the highway," said Darcy Benedict, a 28-year-old UIC medical school student. "I could see blue flames rising up."

Benedict and her boyfriend saw the fire from Interstate 55, a mile away, and got off the highway to get a better look.

At least 40 people stood behind police tape, bundled up and taking videos with cellphones. Several wondered how firefighters would be able to contain the blaze.

The commander at the scene called for a 5-11 with two "special alarms" to bring in special equipment and more manpower as the massive five started spreading to other buildings.

“I’m looking at the south side of the main fire building and there’s a big portion of exterior wall and roof collapse,” Fire Department spokeswoman Meg Ahlheim said as firefighters made progress around 10:30 p.m.

Special alarms are rare. A 5-11 with two special alarms was called in 2006 when a fire gutted the historic Wirt Dexter Building in the South Loop. That fire broke out before 3 p.m. on a weekday, snarled downtown traffic and forced the CTA to stop service on Loop L tracks.

There was a 5-11 alarm fire in the Avondale neighborhood on the Northwest Side last year. That fire burned for hours and required about 200 firefighters, but no special alarms were called.

Alarms normally escalate one at a time beyond a normal fire response up to a fifth alarm, though the scene commander skipped a fourth alarm Tuesday night once the fire jumped to another building.

lford@tribune.com
Twitter: @ltaford

pnickeas@tribune.com
Twitter: @peternickeas

ehirst@tribune.com
Twitter: @ellenjeanhirst

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Cameron promises Britons straight choice on EU exit

LONDON (Reuters) - Prime Minister David Cameron promised on Wednesday to give Britons a referendum choice on whether to stay in the European Union or leave if he wins an election in 2015, placing a question mark over Britain's membership for years.

Cameron ended months of speculation by announcing in a speech the plan for a vote sometime between 2015 and the end of 2017, shrugging off warnings that this could imperil Britain's economic prospects and alienate its biggest trading partner.

He said the island nation, which joined the EU's precursor European Economic Community 40 years ago, did not want to retreat from the world, but public disillusionment with the EU was at "an all-time high".

"It is time for the British people to have their say. It is time for us to settle this question about Britain and Europe," Cameron said. His Conservative party will campaign for the 2015 election promising to renegotiate Britain's EU membership.

"When we have negotiated that new settlement, we will give the British people a referendum with a very simple in or out choice to stay in the European Union on these new terms; or come out altogether. It will be an in-out referendum."

The speech firmly ties Cameron to an issue that was the bane of a generation of Conservative leaders. In the past, he has avoided partisan fights over Europe, the undoing of the last two Conservative prime ministers, John Major and Margaret Thatcher.

Britain would seek to claw back powers from Brussels, he said, a proposal that will be difficult to sell to other European countries. London will do an "audit" to determine which powers Brussels has that should be delegated to member states.

Sterling fell to its lowest in nearly five months against the dollar on Wednesday as Cameron was speaking.

The response from EU partners was predictably frosty. French Foreign Minister Laurent Fabius quipped: "If Britain wants to leave Europe we will roll out the red carpet for you," echoing Cameron himself, who once used the same words to invite rich Frenchmen alienated by high taxes to move to Britain.

German Foreign Minister Guido Westerwelle said his country wanted Britain to remain a full EU member, but London could not expect to pick and choose the aspects of membership it liked.

Business leaders have warned that the prospect of years of doubt over Britain's EU membership would damage the investment climate.

"Having a referendum creates more uncertainty and we don't need that," Martin Sorrell, chief executive of advertising giant WPP, told the World Economic Forum in Davos.

"This is a political decision. This is not an economic decision. This isn't good news. You added another reason why people will postpone investment decisions."

The speech also opens a rift with Cameron's junior coalition partners, the Liberal Democrats. Their leader, Deputy Prime Minister Nick Clegg, said the plan would undermine a fragile economic recovery.

And even allies further afield are wary: the United States has said it wants Britain to remain inside the EU with "a strong voice".

EUROSCEPTICS THRILLED

Cameron has been pushed into taking such a strong position in part by the rise of the UK Independence Party, which favors complete withdrawal from the EU and has climbed to third in opinion polls, mainly at the expense of the Conservatives.

"All he's trying to do is to kick the can down the road and to try and get UKIP off his back," said UKIP leader Nigel Farage.

Eurosceptics in Cameron's party were thrilled by the speech. Conservative lawmaker Peter Bone called it "a terrific victory" that would unify 98 percent of the party. "He's the first prime minister to say he wants to bring back powers from Brussels," Bone told Reuters. "It's pretty powerful stuff".

Whether Cameron will ever hold the referendum remains as uncertain as the Conservatives' chances of winning the next election in 2015.

They trail the opposition Labour party in opinion polls, and the coalition government is grappling with a stagnating economy as it pushes through public spending cuts to reduce Britain's large budget deficit.

Cameron said he would prefer Britain, the world's sixth biggest economy, to remain inside the 27-nation EU. As long as he secured the reforms he wants, he would campaign for Britain to stay inside the EU "with all my heart and soul".

But he also made clear he believed the EU must be radically reformed. It was riskier to maintain the status quo than to change, he said.

"The biggest danger to the European Union comes not from those who advocate change, but from those who denounce new thinking as heresy," he said.

"WAFER THIN" CONSENT

The euro zone debt crisis was forcing the bloc to change, and Britain would fight to make sure new rules were fair to countries that didn't use the common currency, he said. Britain is the largest of the 10 EU members that do not use the euro.

Democratic consent for the EU in Britain was now "wafer thin", he said, reflecting the results of opinion polls that show a slim majority would vote to leave the bloc.

"Some people say that to point this out is irresponsible, creates uncertainty for business and puts a question mark over Britain's place in the European Union," said Cameron. "But the question mark is already there: ignoring it won't make it go away."

Asked after the speech whether other EU countries would agree to renegotiate Britain's membership, Cameron said he was an optimist and that there was "every chance of success."

"I want to be the prime minister who confronts and gets the right answer for Britain on these kind of issues," he said.

It is nearly 40 years since British voters last had a say in a referendum on Britain's membership of the European club. A 1975 vote saw just over 67 percent opt to stay inside with nearly 33 percent wanting to leave.

(Additional reporting by Paul Taylor in Davos and Alexandra Hudson in Berlin; Editing by Guy Faulconbridge and Peter Graff)

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Stock futures imply flat open at five-year highs

NEW YORK (Reuters) - Stock index futures pointed to a flat open on Tuesday as investors held back from making large bets ahead of a busy week for corporate earnings and after recently notching five-year highs.

Both the Dow and S&P 500 closed at their highest levels so far in this earnings season, with the gains largely coming on better-than-expected results. But despite bullish statements from major companies, including big banks, many investors are worried other reports will reflect economic uncertainty in the fourth quarter.

"The market has been pleased with earnings thus far, and it is encouraging to see a cyclical company like DuPont show revenue strength, but I'm waiting on more tech and energy earnings until I come down one way or the other on this season," said Adam Sarhan, chief executive of Sarhan Capital in New York.

reported revenue that was ahead of Wall Street expectations, sending shares up 1.4 percent to $47.65 before the opening bell. However, slumping demand for pigment and solar panel parts hurt fourth-quarter profit.

Travelers Cos Inc gained 2.9 percent to $78.50 after forecasting higher premiums across its businesses, though it also posted earnings that fell by half from losses related to Hurricane Sandy.

On the downside, Johnson & Johnson , the diversified health company, fell 0.9 percent to $72.55 after forecasting 2013 earnings below expectations, while Verizon Communications Inc lost 1.5 percent to $41.90 after reporting a steep loss on pension liabilities and charges related to Sandy.

All four companies are Dow components, while Google Inc and Texas Instruments are scheduled to report after the market closes. Tech earnings will be in particular focus after Intel Corp last week gave a revenue outlook that was below expectations.

Overall, S&P 500 fourth-quarter earnings are forecast to have risen 2.5 percent, according to Thomson Reuters data. That estimate is above the 1.9 percent forecast from a week ago but well below the 9.9 percent fourth-quarter earnings forecast from October 1, the data showed.

S&P 500 futures fell 1.4 point and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 18 points and Nasdaq 100 futures rose 1.25 points.

Monday was a market holiday for Martin Luther King Jr. Day in the United States. President Barack Obama at his inauguration for a second term on Monday called for aggressive action on climate change, economic equality and the federal budget.

"It remains a question whether Obama will be able to deliver on his agenda, but a sector like solar power companies could continue to be strong as he pushes for action," Sarhan said.

Markets have recently been pressured by uncertainty stemming from Washington about the federal debt limit and spending cuts that could hamper U.S. growth.

Republican leaders in the House of Representatives said they aim to pass on Wednesday a nearly four-month extension of the U.S. debt limit, allowing the government to borrow enough to meet its obligations during that period.

U.S. shares of Research in Motion jumped 7 percent to $16.95 in premarket trading a day after its chief executive said the company may consider strategic alliances with other companies after the launch of devices powered by RIM's new BlackBerry 10 operating system.

The Dow and S&P 500 closed at five-year highs on Friday as the market registered a third straight week of gains on a solid start to the quarterly earnings season, including positive results from Morgan Stanley and General Electric Co .

(Editing by Chizu Nomiyama and Kenneth Barry)

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Jim, John Harbaugh ready for rematch at Super Bowl

SANTA CLARA, Calif. (AP) — Jim and John Harbaugh have exchanged a handful of text messages, and plan to leave it at that. No phone conversations necessary while the season's still going. No time for pleasantries, even for the friendly siblings.

There is work to be done to prepare for the Super Bowl, prepare for each other, prepare for a history-making day already being widely hyped as "Harbowl" or "Superbaugh" depending which nickname you prefer.

"It doesn't matter who the coach is, what relationship you have with the person on the other side," 49ers coach Jim Harbaugh said so matter-of-factly Monday afternoon.

Their parents sure aren't picking sides for the Feb. 3 matchup in New Orleans.

These days, the Harbaughs' longtime coaching father, Jack, stays away from game-planning chatter or strategy sessions with his Super Bowl-bound coaching sons. Baltimore's John Harbaugh and little brother Jim have been doing this long enough now to no longer need dad's input.

Yet, they still regularly seek it. And, their father does offer one basic mantra: "Get ahead, stay ahead."

"Probably the greatest advice that I've ever been given and the only advice that I've ever found to be true in all of coaching, I think we mentioned it to both John and Jim ... the coaching advice is, 'Get ahead, stay ahead,'" Jack Harbaugh said.

"If I'm called upon, I'll repeat that same message."

His boys still call home regularly to check in with the man who turned both on to the coaching profession years ago, and the mother who has handled everything behind the scenes for decades in a highly competitive, sports-crazed family — with all the routine sports clichés to show for it.

The Harbaugh brothers will become the first siblings to square off from opposite sidelines when their teams play for the NFL championship at the Superdome.

Not that they're too keen on playing up the storyline that has no chance of going away as hard as they try.

"Well, I think it's a blessing and a curse," Jim Harbaugh said Monday. "A blessing because that is my brother's team. And, also, personally I played for the Ravens. Great respect for their organization. ... The curse part would be the talk of two brothers playing in the Super Bowl and what that takes away from the players that are in the game. Every moment that you're talking about myself or John, that's less time that the players are going to be talked about."

Both men love history, just not the kind with them making it.

"I like reading a lot of history ... I guess it's pretty neat," John Harbaugh offered Monday. "But is it really going to be written about? It's not exactly like Churchill and Roosevelt or anything. It's pretty cool, but that's as far as it goes."

Nice try, guys.

John watched the end of Jim's game from the field in Foxborough, Mass., as Baltimore warmed up for the AFC championship game. Jim called his sister's family from the team plane before takeoff after a win at Atlanta and asked how his big brother's team was doing against New England.

The improbable Super Bowl features a set of brothers known around the NFL as fierce competitors unafraid to make a bold move during the season. Unafraid to upset anyone who stands in their way.

In fact, each one made a major change midseason to get this far — John fired his offensive coordinator, while Jim boosted his offense with a quarterback switch from Alex Smith to Colin Kaepernick.

Leading up to Sunday's games, parents Jack and Jackie said they would wait to decide whether to travel to New Orleans if both teams advanced or stick to what has been working so well — watching from the comfort of their couch in Mequon, Wis.

"We enjoy it very much. We get down in our basement, turn on the television and just have a fantastic day watching outstanding football," Jack said last week. "We share our misery with no one but ourselves. Not only the misery, but the ups and downs, the ins and outs of an outstanding professional game."

And, no, the Harbaughs weren't looking ahead to a potential big trip to the Big Easy.

Jack insists his wife is quick to pull out that old sports cliche: "It's one game at a time. I think it's very appropriate," he said.

Jim figures they won't possibly miss this history-making game.

"I think they'll be there," he said with a smile.

The brothers, separated in age by 15 months, have taken different paths to football's biggest stage — years after their intense games of knee football at the family home. They tried to beat each other at cards, or whatever other game it was at the time. Sometimes, they tried to beat each other up. Sister, Joani Crean, often got in on the fun, too.

The 49-year-old Jim never reached a Super Bowl, falling a last-gasp pass short during a 15-year NFL career as a quarterback. The 50-year-old John never played in the NFL.

Still, both will tell you, "Who's got it better than us? No-body!" — one catchphrase they got from their dad.

"We can't put into words what it means to see John and Jim achieve this incredible milestone," their brother-in-law, Indiana basketball coach Tom Crean, said on Twitter. "We talked to Jim (before) his team plane left. All he wanted to know was how was John doing? How were they playing? One incredible family who puts the care, well-being and love for each other at the forefront like most families do. Again, we are very proud of them. Going to be exciting to watch it unfold."

John worked his way up from the bottom of the coaching ranks, while Jim was the star college quarterback at Michigan, a first-round draft pick and eventual Pro Bowler who made coaching his career once he retired.

John already has the one-up, while Jim's team is the early favorite. John's Ravens beat the 49ers 16-6 on Thanksgiving night 2011, in Jim's rookie season as an NFL coach — though both know that means nothing now.

"I just want everybody to know, that was a four-day deal and every story has been told," John said. "We're not that interesting. There's nothing more to learn. The tape across the middle of the room story, OK, you got it? It's OK. It was just like any other family, really. I really hope the focus is not so much on that. We get it, it's really cool and it's exciting and all that."

Said Jim, "Completely new business."

In spite of his efforts to avoid the topic, Jim did take the opportunity to express how proud he is of John.

"He's a great football coach, a real grasp of all phases — offense, defense, special teams. I think he could coordinate at least two of those phases and do it as well as anyone in the league," Jim said. "I've got half the amount of coaching experience he does. Again, it's not about us. I keep coming back to that. I'm really proud of my brother. I love him. That's the blessing part, that this is happening to him."

And, fittingly for the big brother, John feels the exact same way.

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AP Sports Writer Dave Ginsburg in Baltimore contributed to this story.

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